We all had a big focus on the quantitative element of the four outcomes (products, services, price and fair value) when the initial paper was published, but it soon became clear that consumer support for, and consumer understanding of, the products and services being provided were of paramount importance and these are the more qualitative elements to deal with.
Consequently, we’ve spent a considerable amount of time and resource looking at this from the perspective of both an adviser and their underlying clients.
I also think we’re going to see more principles-based regulation from the FCA, and if you need some immediate examples, look no further than the anti-greenwashing rules and the proposals for sustainability disclosure requirements and investment labels for sustainable funds.
FTA: Where has consumer duty had the biggest impact?
KS: I hope that a positive impact for clients has been the biggest change and that they have noticed that we are all doing more to continue to deliver great outcomes for them.
FTA: How has it changed the relationship between firms and their clients?
KS: Having spoken to several adviser firms about this, I know that data is now firmly driving what can and can’t be supported at a service level, and that using data to improve client segmentation has played a big part in adviser firms’ delivery of services to their clients.
I am certain that this extra control is going to be reflected in the governing body assessments (board reports) that are due to be completed by the end of July.
FTA: What impact, if any, has it had on adviser processes?
KS: The biggest single impact I’ve seen is the need to gather and present evidence that the adviser is meeting the cross-cutting rules and that this is consistently delivered across a business.
This has been a big undertaking for a lot of firms, and it takes time to embed this within a business, so I am sure that the past 12 months has seemed somewhat frenetic for many firms.
We referred to principles-led regulation being a real cultural challenge for businesses earlier in this conversation and that also takes time to embed, but I’ve been lucky enough to see some fantastic examples of how adviser firms are using the consumer duty to fundamentally re-shape their services and to improve client outcomes.
FTA: What do you expect to change in the second phase?
KS: I’d suggest we’re going to see the same as we saw after phase one: some examples of excellent practice and some that aren’t quite so good.
